WRAPUP 2-U.S.

Jobless claims hint at firming job market

February 14, 2013|Reuters

* Jobless claims fall 27,000 last week

* Continuing claims fall to 4-1/2-year low

* Data suggests better labor market, but economists cautious

By Lucia Mutikani

WASHINGTON, Feb 14 (Reuters) - The number of Americansfiling new claims for unemployment benefits fell more thanexpected last week, offering hope the sluggish labor marketrecovery may have picked up a step.

Initial claims for state jobless aid dropped 27,000 to aseasonally adjusted 341,000, the Labor Department said onThursday. The prior week's claims figure was revised to show2,000 more applications were received than previously reported.

Last week's drop in claims exceeded economists' expectationsfor only a 6,000 decline and pushed first-time filings down tothe lower end of their range for this year.

"It does seem as if claims are trending down a bit. We thinkpayroll growth will pick up this year and this sort of gradualdowntrend in claims seems consistent with that," said SamCoffin, an economist at UBS in New York.

But some economists said a blizzard that slammed the EastCoast late last week and difficulties smoothing out the data forseasonal fluctuations could have artificially depressed claims.

While they were encouraged by the decline, they urgedcaution against reading too much into the data.

"Claims may not be giving a reliable signal about the labormarket," said Daniel Silver, an economist at JPMorgan in NewYork.

A Labor Department analyst said claims for Illinois andConnecticut, one of the states hardest hit by the snowstorm, hadbeen estimated. He said given that most claims are filed online,the blizzard appeared to have little effect on the broader data.

U.S. financial market were little moved by the data asinvestors focused on news the euro zone economy slipped deeperinto recession in the fourth quarter. Stocks on Wall Street werelittle changed, while the dollar and U.S. Treasury debt pricesrose.

LAYOFFS HAVE EBBED

The data offered more evidence that U.S. companies are nolonger aggressively laying off workers. However, they stillappear to be in no hurry to step-up hiring against the backdropof still lackluster demand.

The economy has struggled to grow much more than 2 percentsince the 2007-09 recession ended, and the jobless rate rose 0.1percentage point to 7.9 percent in January.

High unemployment prompted the Federal Reserve last year tolaunch an open-ended bond buying program that it said it wouldkeep up until it saw a substantial improvement in the outlookfor the labor market.

It also has committed to hold interest rates near zero untilunemployment reaches 6.5 percent, provided inflation does notthreaten to push over 2.5 percent.

Job gains averaged 181,000 per month in 2012, far less thanthe at least 250,000 that economists say is needed tosignificantly reduce the ranks of unemployed.

"The rate of job losses has slowed in early 2013, which isconsistent with a modest pickup in net job creation," said JohnRyding, chief economist at RDQ Economics in New York.

"Our projection for 2013 is that the average pace of jobgrowth will be around 175,000 per month and we judge this dropin claims to be broadly consistent with this forecast."

Last week, the four-week moving average for new claims, abetter measure of labor market trends, rose 1,500 to 352,500.The average had approached a five-year low in the prior week.

The number of people still receiving benefits under regularstate programs after an initial week of aid dropped 130,000 to3.11 million in the week ended Feb. 2.

That was the lowest level since July 2008 and could be afunction of people either securing jobs or simply exhaustingtheir benefits. So-called continuing claims had hovered around3.2 million since late November.